Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 1 of 23
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
`
`CASE NO. 22-cv-23753-KMM
`
`
`EDWIN GARRISON, et al., on behalf of
`themselves and all others similarly situated,
`
`
`
`
`Plaintiffs,
`
`v.
`
`SAM BANKMAN-FRIED, et al.,
`
`Defendants.
`________________________________________/
`
`DEFENDANT SAM BANKMAN-FRIED’S UNOPPOSED MOTION TO STAY,
`OR, ALTERNATIVELY, MOTION TO COMPEL ARBITRATION OR TO DISMISS
`AMENDED COMPLAINT
`
`
`
`
`
`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 2 of 23
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`TABLE OF CONTENTS
`
`II.
`
`B.
`
`Page
`
`CONFLICT OF POSITION WITH CO-DEFENDANTS .............................................................. 1
`PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT ....................................... 1
`NATURE AND STATE OF PROCEEDINGS............................................................................... 2
`I.
`STATEMENT OF FACTS ................................................................................................. 2
`A.
`FTX US Terms of Service ...................................................................................... 2
`B.
`FTX Trading Terms of Service ............................................................................... 5
`ARGUMENT ...................................................................................................................... 6
`A.
`The Claims Against Mr. Bankman-Fried Should Be Stayed During the
`Pendency of Parallel Criminal Proceedings ............................................................ 6
`Plaintiffs’ Claims Against Mr. Bankman-Fried Should Be Compelled to
`Arbitration or Dismissed Because They Must Be Brought Individually,
`Through Arbitration ................................................................................................ 9
`1.
`The Federal Arbitration Act governs the FTX arbitration
`agreements and mandates their enforcement. ........................................... 11
`Dismissal, as opposed to a stay pending resolution at arbitration, is
`warranted................................................................................................... 12
`The applicable ToS include choice-of-law and choice-of-forum
`provisions requiring these disputes to be heard elsewhere. ...................... 14
`Plaintiffs consented to FTX’s terms of service, which included
`arbitration agreements and class action waivers. ...................................... 15
`The class action waivers are enforceable. ................................................. 16
`The FTX arbitration agreements are valid and enforceable. ..................... 17
`Applying Florida and Eleventh Circuit law would not result in a
`different outcome for either ToS. .............................................................. 20
`CONCLUSION ................................................................................................................. 20
`III.
`CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1(a)(3)........................................ 21
`
`2.
`
`3.
`
`4.
`
`5.
`6.
`7.
`
`-i-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 3 of 23
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`Defendant Sam Bankman-Fried files this Unopposed Motion to Stay, or, alternatively,
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`Motion to Compel Arbitration or to Dismiss the Amended Complaint filed on December 16, 2022
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`(ECF No. 16). Plaintiffs do not oppose Mr. Bankman-Fried’s request for a stay, and the “Celebrity
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`Defendants” take no position on the request.
`
`CONFLICT OF POSITION WITH CO-DEFENDANTS
`
`Due to a clear conflict with other Defendants, Mr. Bankman-Fried files this Motion
`
`independently. Mr. Bankman-Fried is not similarly situated to the other FTX Insider Defendants.
`
`Defendants Singh, Ellison, and Wang have pleaded guilty in the FTX-related criminal proceedings
`
`in New York. Defendant Trabucco has not been criminally charged. And, according to press
`
`reports, Defendant Friedberg is apparently cooperating with the government. Consequently, Mr.
`
`Bankman-Fried’s Fifth Amendment rights are directly implicated by this civil proceeding in ways
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`that the other FTX Insider Defendants’ rights are not. Mr. Bankman-Fried is also not similarly
`
`situated to the “Celebrity Defendants,” who have been sued for different alleged conduct.
`
`PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT
`
`This case should be stayed as to Mr. Bankman-Fried until the conclusion of the criminal
`
`action against him in the Southern District of New York (Case No. 22-cr-00673). As indicated
`
`above, Plaintiffs do not oppose a stay and the “Celebrity Defendants” take no position on a stay.
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`Further, as explained below, there is significant and evident overlap between the active criminal
`
`action in New York and this civil action in Florida, especially with respect to the allegations and
`
`claims against Mr. Bankman-Fried. Mr. Bankman-Fried’s Fifth Amendment rights would be
`
`severely and impermissibly jeopardized if he is forced to defend against the claims in this case.
`
`If there is no stay as to Mr. Bankman-Fried, the claims against him should be compelled to
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`arbitration or dismissed with prejudice under Rules 12(b)(1) and 12(b)(3). Plaintiffs are subject to
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`
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 4 of 23
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`
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`FTX US and FTX Trading, Ltd.’s Terms of Service, which contain enforceable arbitration clauses
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`and class action waivers, compelling arbitration or dismissal of Plaintiffs’ claims.
`
`NATURE AND STATE OF PROCEEDINGS
`
`On November 15, 2022, Plaintiffs filed the initial class action Complaint in the matter.
`
`ECF No. 1. On December 16, 2022, Plaintiffs filed the Amended Complaint. ECF No. 16 (Am.
`
`Compl.). The core allegations arise out of alleged use of the FTX US and/or FTX Trading
`
`cryptocurrency exchanges to purchase FTX yield-bearing accounts (“YBAs”). See Am. Compl.
`
`at 9–12, ¶ 22. Plaintiffs allege they signed-up for “the FTX app” and subsequently lost assets held
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`in YBAs on FTX US and/or FTX Trading in 2022. Am. Compl. at 3–4, ¶¶ 5, 6.
`
`The Amended Complaint is silent as to when Plaintiffs registered with FTX US and/or
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`FTX Trading, and also silent as to which Plaintiffs registered with which FTX-related service. The
`
`Amended Complaint is similarly silent as to what assets each Plaintiff held on which platform, and
`
`during what time frame. Nonetheless, Plaintiffs allege that due to various actions of Defendants,
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`Plaintiffs and the class have been “robbed” of their assets. See Am. Compl. at 4, ¶ 6.
`
`Count I is brought under the Florida Securities and Investor Protection Act. Count II is a
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`FDUTPA claim. Count III is for civil conspiracy. And Count IV is for a declaratory judgment.
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`As against the “FTX Insiders,” including Mr. Bankman-Fried, there are claims for breach of
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`fiduciary duty (Count IV), negligence (Count V), and conversion (Count VI).
`
`I.
`
`STATEMENT OF FACTS
`
`A.
`
`FTX US Terms of Service
`
`In order to use FTX US’s services, including creating and using an FTX US account,
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`Plaintiffs would have been required to consent to the FTX US User Agreement (the “FTX US User
`
`-2-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 5 of 23
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`
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`Agreement”), contained within FTX US’s terms of service (“FTX US ToS”).1 See Jeremy D.
`
`Mishkin Declaration, Ex. A (FTX US User Agreement). Although Plaintiffs have not specified
`
`the dates they registered for FTX US accounts or held assets via FTX US, the “Terms of Service”
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`were displayed prominently as of May 2022 at the bottom of FTX US’s website, under the header
`
`“Legal.”2 Clicking on the ToS header, available on every page of the website, redirected users to
`
`a User Agreement to which all FTX US users were required to agree in order to use FTX US
`
`services. See FTX US User Agreement at 1, ¶ 1.
`
`The FTX US User Agreement contains a class action waiver and an agreement to
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`individually arbitrate all disputes arising out of the ToS or use of FTX US services. Id. at 1, 12.
`
`Section 30 of the User Agreement, labeled “Dispute Resolution,” mandates that disputes “will be
`
`
`1 This Court may consider the FTX.US and FTX Trading ToS for the purposes of a motion to
`dismiss under Rule 12 because Plaintiffs incorporated them by reference in the Amended
`Complaint. Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002).
`
`2 On November 11, 2022 and November 14, 2022, FTX Trading Ltd. and 101 affiliated debtors,
`including FTX US, each filed a voluntary petition for relief under Chapter 11 in the United States
`Bankruptcy Court for the District of Delaware. FTX US’s website was subsequently taken down
`as part of the restructuring and any attempt to access that domain name redirects the user to
`restructuring.ra.kroll.com. See FTX.us. However, the submitted copy of the ToS is obtained from
`a download of FTX.us as of May 16, 2022, captured by Wayback Machine. “Courts have taken
`judicial notice of the contents of web pages available through the Wayback Machine as facts that
`can be accurately and readily determined from sources whose accuracy cannot reasonably be
`questioned.” Brown v. Google LLC, 525 F. Supp. 3d 1049, 1061 (N.D. Cal. 2021) (taking judicial
`notice of websites as of dates captured by Wayback Machine) (citing Erickson v. Nebraska Mach.
`Co., 2015 WL 4089849, at *1 n. 1 (N.D. Cal. July 6, 2015) (taking judicial notice of website from
`Wayback Machine)).
`
`Moreover, a January 6, 2023 internet search on “how to register an FTX US account tos”
`reflects that prior to the bankruptcy, www.help.ftx.us, required users to “Agree with Our Terms
`and Service” as part of “Step 1” in creating an account. See Mishkin Decl. Ex. B (“Jan. 6, 2023
`Internet Search”). Moreover, the continued use of FTX US’s services after any amendment or
`updates to the ToS constituted acceptance of the revised ToS, including the dispute resolution
`provision, unless the user rejected any changes to the dispute resolution provision within 30 days
`of the date the change became effective or the user was notified of the change. See User Agreement
`at 1, ¶ 2; 13, ¶ 30(g).
`
`-3-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 6 of 23
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`
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`resolved solely by binding, individual arbitration and not in a class, representative or consolidated
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`action or proceeding.” Id. at 12. Section 30 also sets forth, inter alia, the manner in which
`
`arbitration is to be conducted, the extremely limited exceptions to mandatory arbitration, and a
`
`class action waiver:
`
`Mandatory Arbitration of Disputes. We agree that any dispute, claim or
`(a)
`controversy arising out of or relating to these Terms or the breach, termination,
`enforcement, interpretation or validity thereof or the use of the Services
`(collectively, “Disputes”) will be resolved solely by binding, individual arbitration
`and not in a class, representative or consolidated action or proceeding. You and
`FTX.US agree that the U.S. Federal Arbitration Act governs the interpretation and
`enforcement of these Terms, and that you and FTX.US are each waiving the right
`to a jury or to participate in a class action. This arbitration provision shall survive
`termination of these Terms.
`
`…
`
`Class Action Waiver. YOU AND FTX.US AGREE THAT EACH
`(f)
`MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOURS OR ITS
`INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS
`MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE
`PROCEEDING. Further, if the parties’ dispute is resolved through arbitration, the
`arbitrator may not consolidate another person’s claims with your claims, and may
`not otherwise preside over any form of a representative or class proceeding. If this
`specific provision is found to be unenforceable, then the entirety of this Dispute
`Resolution section shall be null and void.
`
`Id. at 12-13 (original emphasis included). Even if an FTX US user did not read more than the first
`
`page of the User Agreement, a portion of that page, also in bolded, capital letters, reads:
`
`IMPORTANT NOTICE REGARDING ARBITRATION: WHEN YOU
`AGREE TO THESE TERMS YOU ARE AGREEING (WITH LIMITED
`EXCEPTION) TO RESOLVE ANY DISPUTE BETWEEN YOU AND
`FTX.US THROUGH BINDING, INDIVIDUAL ARBITRATION RATHER
`THAN IN COURT. PLEASE REVIEW CAREFULLY SECTION 30
`“DISPUTE RESOLUTION” BELOW FOR DETAILS REGARDING
`ARBITRATION.
`
`Id. at 1. Also, directly under this clause, the User Agreement reads, “1. Agreement to
`
`Terms/Privacy Policy. By using our Services, you agree to be bound by these Terms. If you don’t
`
`agree to be bound by these Terms, do not use the Services.” Id. at 1, ¶ 1.
`
`-4-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 7 of 23
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`
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`The FTX US User Agreement’s explicit class action waiver and mandatory individual
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`arbitration clause are subject to limited exceptions for qualifying disputes in small claims court
`
`and equitable claims grounded solely in infringement or misappropriation of intellectual property
`
`rights. Id. at 12, ¶ 30(b). None of those exceptions apply here.
`
`By registering accounts and using FTX US services, Plaintiffs and any putative class
`
`members consented to FTX US’s ToS, including the arbitration agreement and class action waiver.
`
`Sections 29 and 30(a) of the User Agreement dictate that any action related to FTX US will be
`
`governed by the FAA. Id. at 12, ¶¶ 29, 30(a).3 Further, the ToS provides that any arbitration shall
`
`be conducted by AAA using its Consumer Arbitration Rules. Id. at 12, ¶ 30(c).
`
`Plaintiffs also admit, without specifying as to which FTX entity, that FTX provided
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`Plaintiffs with terms of service. See Am. Compl. at 17–18, ¶ 61.
`
`B.
`
`FTX Trading Terms of Service
`
`The Amended Complaint also alleges, without specification, that at least one of the named
`
`Plaintiffs deposited or held assets using FTX Trading Ltd., doing business as FTX Trading.” See
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`Am. Compl. at 1. Similar to FTX US, in order to use FTX Trading’s services, Plaintiffs would
`
`have been subject to the Terms of Service for FTX Trading Ltd (“FTX Trading ToS”).4 See
`
`Mishkin Decl. Ex. C (“FTX Trading User Agreement”).
`
`
`
`The FTX Trading ToS, at times relevant to the Amended Complaint, included a
`
`mandatory arbitration clause and class action waiver. Id. at 27. The FTX Trading ToS expressly
`
`
`3 The User Agreement also contains choice of law and venue clauses, specifying that for all
`disputes not covered by the arbitration provision, the laws of the State of California govern and
`the courts located in Alameda County, California, shall hear any such action. See FTX US User
`Agreement at 12, ¶ 29.
`
`4 See supra n. 1, n. 2. For the reasons explained previously, the FTX Trading ToS are currently
`unavailable on FTX’s former website.
`
`-5-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 8 of 23
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`
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`provided that “any Dispute shall be referred to and finally determined by arbitration
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`administered by the Singapore International Arbitration Centre ("SIAC") in accordance with the
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`Arbitration Rules of the SIAC ("SIAC Rules") for the time being in force.” It also provided that
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`“(A) any Dispute shall be referred to arbitration in accordance with this Clause 38.12 on an
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`individual basis only and not as a claimant or class member in a purported class or
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`representative action; (B) combining or consolidating individual arbitrations into a single
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`arbitration is not permitted without the consent of all parties. Id. (emphasis added).
`
`As per the Amended Complaint, Plaintiffs expressly rely on the FTX Trading ToS and
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`firmly ground certain claims in them, effectively conceding that other portions of the ToS should
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`be enforceable. See Am. Compl. at 17–18, ¶ 61.
`
`II.
`
`ARGUMENT
`
`The claims against Mr. Bankman-Fried should be stayed during the pendency of his
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`criminal case in order to preserve his Fifth Amendment rights. If the Court does not grant a stay,
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`the claims against Mr. Bankman-Fried should be compelled to arbitration or dismissed for lack of
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`subject-matter jurisdiction and improper venue, based on Plaintiffs’ consent to the arbitration
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`agreements and the class action waivers in FTX US and FTX Trading’s Terms of Service. At a
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`minimum, the Court should stay these claims pending resolution at arbitration.
`
`A.
`
`The Claims Against Mr. Bankman-Fried Should Be Stayed During the
`Pendency of Parallel Criminal Proceedings
`
`
`
`
`
`The claims against Mr. Bankman-Fried should be stayed during the pendency of the
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`criminal case against him in the Southern District of New York (Case No. 22-cr-00673-LAK).
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`The charges in that case arise out of the same core facts as this civil case. Mr. Bankman-Fried’s
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`Fifth Amendment rights are thus implicated by nearly every aspect of this civil proceeding.
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`-6-
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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 9 of 23
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`
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`Therefore, if ever a stay pending the resolution of parallel criminal proceedings was both warranted
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`and necessary to preserve a criminal defendant’s constitutional rights, this is that case.
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`A court may exercise its discretion to stay civil proceedings in light of an ongoing criminal
`
`investigation if the interests of justice require it. United States v. Kordel, 397 U.S. 1, 12 n. 27
`
`(1970). While the “[t]he Eleventh Circuit has articulated a narrow set of circumstances which
`
`require that a stay be granted[,]” those circumstances warranting a stay are indisputably present
`
`here. Gonzalez v. Israel, No. 15-cv-60060, 2015 WL 4164772, at *2 (S.D. Fla. July 9, 2015) (citing
`
`Global Aerospace, Inc. v. Platinum Jet Mgmt., LLC, 2009 WL 2589116, at *1 (S.D. Fla. Aug.19,
`
`2009)). In the Eleventh Circuit, courts “must consider whether a defendant in both a civil and
`
`criminal matter is forced to choose between waiving his privilege against self-incrimination or
`
`losing the civil case in summary proceedings.” Id. Generally, “the strongest case for a stay is
`
`when a party under indictment for a serious offense is required to defend a civil or administrative
`
`action involving the same matter.” Judd v. Weinstein, No. CV-185724, 2019 WL 2879875, at *2
`
`(C.D. Cal. Apr. 2, 2019) (citations and internal quotations omitted). In determining whether to
`
`grant a stay, courts in the Eleventh Circuit principally consider the following factors:
`
`[(1)] the degree and severity of overlap between the civil and criminal proceedings;
`[(2)] whether the criminal charges are hypothetical or, by contrast, whether an
`indictment or its equivalent has been issued; [(3)] and the specificity of the
`invocation of the Fifth Amendment privilege relative to the civil proceeding.
`
`Gonzalez, 2015 WL 4164772, at *3 (compiling Eleventh Circuit cases discussing relevant factors).
`
`Here, each of the three factors weighs in favor of staying this civil proceeding. 5
`
`
`5 Courts will also consider other factors, including the private and public interests, the degree of
`overlap between the cases, and the case status. Lay v. Hixon, 2009 WL 1357384, at *3 (S.D. Ala.
`May 12, 2009) (internal quotations and citations omitted). These factors also militate in favor of
`a stay.
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`
`
`-7-
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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 10 of 23
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`
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`First, the level of factual and legal overlap between this case and the criminal proceeding
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`in New York cannot be overstated. Indeed, the alleged facts giving rise to the criminal charges
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`against Mr. Bankman-Fried track almost identically to those alleged here. Therefore, because “the
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`similarity of issues in the underlying civil and criminal actions is considered the most important
`
`threshold issue in determining whether to grant a stay”—Love v. City of Lanett, 2009 WL
`
`2525371, at *2 (M.D. Ala. Aug.17, 2009) (citation omitted); Doe 1 v. City of Demopolis, 2009 WL
`
`2059311, at *3 (S.D. Ala. July 10, 2009)—this factor strongly favors a stay.
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`Second, the status of the criminal proceeding also weighs in favor of a stay. The criminal
`
`proceeding against Mr. Bankman-Fried is not hypothetical, as the indictment and subsequent
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`superseding indictments charging Mr. Bankman-Fried have been formally filed in New York. The
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`criminal case is also in active discovery, trial is scheduled to begin on October 2, 2023, and the
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`Court has stated on the record that it is unlikely to alter that schedule. See, e.g., Jan. 3, 2023, Minute
`
`Entry of Arraignment before Hon. Lewis A. Kaplan, United States v. Bankman-Fried, No. 22-cr-
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`00673-LAK (S.D.N.Y. Dec. 22, 2022). In addition, three of the defendants in this action—Ellison,
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`Wang, and Singh—have pleaded guilty in the criminal case and are expected to be testifying
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`witnesses against Mr. Bankman-Fried at trial.
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`Third, Mr. Bankman-Fried’s Fifth Amendment rights are directly implicated by every
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`aspect of this civil action. “A stay is warranted when a defendant in both a civil and a criminal
`
`case, is forced to choose between waiving his privilege against self-incrimination or losing the
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`civil case in [summary proceedings].” A.B. ex rel. Baez v. Seminole Cnty. Sch. Bd., No. 6:05-cv-
`
`802, 2005 WL 2614622, at *1 (M.D. Fla. Oct. 14, 2005) (citing Shell Oil Co. v. Altina Associates,
`
`Inc., 866 F. Supp. 536, 540 (M.D. Fla. 1994)) (internal citations omitted). Here, Fifth Amendment
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`-8-
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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 11 of 23
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`
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`implications would arise at nearly every juncture–in written discovery, during depositions, in
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`responsive pleadings and motion practice, and also at trial. Thus, should this action proceed, Mr.
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`Bankman-Fried will be impermissibly forced to choose between waiving his Fifth Amendment
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`privilege in the criminal proceeding or defending this civil action. This too warrants a stay.
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`In sum, all of the relevant factors weigh in favor of a stay as to Mr. Bankman-Fried. Courts
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`in this Circuit frequently grant stays, or partial stays, of civil actions during the pendency of parallel
`
`criminal proceedings when a defendant’s constitutional rights are jeopardized. See, e.g., Gonzalez,
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`2015 WL 4164772, at *4 (compiling cases granting stays of civil actions during pendency of
`
`criminal proceedings); Ventura v. Brosky, No. 06-cv-22026, 2006 WL 3392207, at *2 (S.D. Fla.
`
`Nov. 21, 2006) (staying civil case due to Fifth Amendment concerns); Doe 1, 2009 WL 2059311,
`
`at *3 (S.D. Ala. July 10, 2009); Lay v. Hixon, No. 09-cv-0075-WS-M, 2009 WL 1357384, at *5
`
`(S.D. Ala. May 12, 2009) (“[G]ranting a stay of this action pending resolution of the state-court
`
`criminal proceedings is appropriate.”). Considering the serious nature of the charges against Mr.
`
`Bankman-Fried, coupled with the undeniable overlap in subject matter between the criminal case
`
`and this civil matter, the present action should be stayed as to Mr. Bankman-Fried.
`
`B.
`
`Plaintiffs’ Claims Against Mr. Bankman-Fried Should Be Compelled to
`Arbitration or Dismissed Because They Must Be Brought Individually,
`Through Arbitration
`
`
`Plaintiffs’ claims against Mr. Bankman-Fried should be compelled to arbitration or
`
`dismissed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(3) based on the
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`arbitration agreements contained in FTX US and FTX Trading, Ltd.’s Terms of Service.6
`
`
`6 Mr. Bankman-Fried, although not a signatory to both ToS, may enforce the arbitration agreement
`because, inter alia, Plaintiffs’ claims are intertwined with the duties and obligations arising from
`the ToS. “[A] litigant who is not a party to an arbitration agreement may invoke arbitration under
`the FAA if the relevant state contract law allows the litigant to enforce the agreement.” Kramer
`v. Toyota Motor Corp., 705 F.3d 1122, 1128–30
`(9th Cir. 2013)
`(citing
`Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009)); Haasbroek v. Princess Cruise Lines,
`
`-9-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 12 of 23
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`Regardless of whether Plaintiffs utilized FTX US services or FTX Trading services, Plaintiffs
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`agreed to bring any related claims individually, through arbitration, in the agreed venue. In the
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`Eleventh Circuit, “[m]otions to compel arbitration are generally treated as motions to dismiss for
`
`lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1).” Schriever v. Navient Sols.,
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`Inc., No. 2:14-cv-596, 2014 WL 7273915, at *2 (M.D. Fla. Dec. 19, 2014); Baptist Hosp. of Miami,
`
`Inc. v. Medica Healthcare Plans, Inc., 376 F. Supp. 3d 1298, 1304 (S.D. Fla. 2019). “[I]n ruling
`
`on a motion to compel arbitration, the Court may consider matters outside of the four corners of
`
`the complaint.” Baptist Hosp. of Miami, Inc., 376 F. Supp. 3d at 1304 (citations omitted). Notably,
`
`in the Amended Complaint, Plaintiffs acknowledge, and argue for the enforceability of, certain
`
`FTX ToS. See Am. Compl. at 17–18. Further, both arbitration clauses are very broad and clearly
`
`encompass Plaintiffs’ claims against Mr. Bankman-Fried, and both unambiguously bar any effort
`
`to bring claims as a class action. Simply put, the arbitration agreements and class action waivers
`
`should be enforced.
`
`
`Ltd., 286 F. Supp. 3d 1352, 1361 (S.D. Fla. 2017) (“[A] nonparty may force arbitration if the
`relevant state contract law allows him to enforce the agreement to arbitrate.”).
`
`Under either Florida or California law, Mr. Bankman-Fried may enforce the agreement.
`See Dimattina Holdings, LLC v. Steri-Clean, Inc., 195 F. Supp. 3d 1285, 1292 (S.D. Fla. 2016)
`(“A non-signatory to an arbitration agreement may compel arbitration when the allegations against
`him are inextricably intertwined with or mirror those against a signatory, or when the allegations
`are of interdependent and concerted misconduct between a non-signatory and a signatory.”); see
`also Kramer, 705 F.3d at 1128–30. Courts in other jurisdictions, when considering defendants
`holding similar company positions to Mr. Bankman-Fried, have allowed those defendants to
`enforce company arbitration agreements. See Frazier v. W. Union Co., 377 F. Supp. 3d 1248,
`1262–64 (D. Colo. 2019) (emphasizing interdependence of claims against signatory and
`nonsignatory defendants and that plaintiffs’ claims were intertwined with the duties and
`obligations arising from the terms of service); Giddings v. Media Lodge, Inc., 320 F. Supp. 3d
`1064, 1081–82 (D.S.D. 2018); CD Partners, LLC v. Grizzle, 424 F.3d 795, 798–99 (8th Cir. 2005).
`
`-10-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 13 of 23
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`
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`1.
`
`The Federal Arbitration Act governs the FTX arbitration agreements
`and mandates their enforcement.
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`The FAA governs both ToS. The FTX US User Agreement explicitly provides that the
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`FAA governs the present arbitration agreement. See FTX US User Agreement at 12, ¶¶ 29, 30(a).
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`As to the FTX Trading User Agreement, the FAA, through the New York Convention, applies to
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`international arbitration agreements so long as no conflict exists. Escobar v. Celebration Cruise
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`Operator, Inc., 805 F.3d 1279, 1284 (11th Cir. 2015); Bautista v. Star Cruises, 396 F.3d 1289,
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`1297 (11th Cir. 2005) (“. . . with FAA provisions applying only where they did not conflict.”).
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`“The Federal Arbitration Act (“FAA”) governs written arbitration agreements affecting interstate
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`commerce.” Norde v. Ctr. for Autism & Related Disorders, LLC, No. 22-cv-00639, 2022 WL
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`4227274, at *2 (N.D. Cal. Aug. 22, 2022) (citing Cir. City Stores, Inc. v. Adams, 532 U.S. 105,
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`111-12 (2001)).7 The FAA dictates that an arbitration agreement “shall be valid, irrevocable, and
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`enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
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`9 U.S.C. § 2.
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`“[I]n deciding whether to compel arbitration, a court must determine two ‘gateway’ issues:
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`(1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement
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`covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (citing Howsam
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`v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). Analyzing both issues leads inexorably to
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`the conclusion that the claims in this lawsuit must be arbitrated.
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`Here, there are explicit, broad arbitration agreements contained in both User Agreements.
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`See FTX US User Agreement at 12-13; FTX Trading User Agreement at 27. The present dispute
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`concerns Plaintiffs’ alleged use of FTX services, and thus is covered by Section 30 of the FTX US
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`7 As addressed in Section (3), below, Ninth Circuit law governs, in accordance with the FTX US
`ToS choice-of-law provision.
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`-11-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 14 of 23
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`
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`User Agreement and Section 38.12 of the FTX Trading User Agreement. See FTX US User
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`Agreement at 12, ¶ 30(a) (“any dispute, claim, or controversy arising out of or relating to … the
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`use of the Services … will be resolved solely by binding, individual arbitration …”); FTX Trading
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`User Agreement at 1 (“Section 38.12 (Arbitration) requires all Disputes to be resolved by way of
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`legally binding arbitration on an individual basis only and not as a claimant or class member in a
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`purported class or representative action.”). Further, were Plaintiffs to contest the validity or
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`arbitrability of the arbitration agreements, any such disputes would similarly be covered and thus
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`could only be determined in the arbitration process. Id.; see also Ahlstrom v. DHI Mortg. Co.,
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`Ltd., L.P., 21 F.4th 631, 634 (9th Cir. 2021) (“It is well-established that some “gateway” issues
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`pertaining to an arbitration agreement, such as issues of validity and arbitrability, can be delegated
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`to an arbitrator by agreement.”). Both gateway conditions are accordingly met.
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`Since both conditions are met, “the [FAA] requires the court to enforce the arbitration
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`agreement in accordance with its terms.” Lim v. TForce Logistics, LLC, 8 F.4th 992, 999 (9th Cir.
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`2021) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)).
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`“By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but
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`instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to
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`which an arbitration agreement has been signed.” Norde, 2022 WL 4227274, at *3 (citing Dean
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`Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985)). The FAA requires arbitration of these
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`claims.
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`2.
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`Dismissal, as opposed to a stay pending resolution at arbitration, is
`warranted.
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`As all claims against Mr. Bankman-Fried are arbitrable and must be submitted to
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`arbitration, dismissal of these claims is appropriate. The Ninth Circuit and Eleventh Circuit are in
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`agreement that on its face, the FAA requires federal district courts to stay judicial proceedings and
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`-12-
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`

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`Case 1:22-cv-23753-KMM Document 152 Entered on FLSD Docket 04/14/2023 Page 15 of 23
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`
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`compel arbitration of claims covered by a written and enforceable arbitration agreement.”
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`Houtchens v. Google LLC, No. 22-cv-02638, 2022 WL 17736778, at *2 (N.D. Cal. Dec. 16, 2022)
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`(citing Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014)); Baptist Hosp. of
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`Miami, Inc. v. Medica Healthcare Plans, Inc., 376 F. Supp. 3d 1298, 1311 (S.D. Fla. 2019) (citing
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`Lambert v. Austin Indus., 544 F.3d 1192, 1195 (11th Cir. 2008)).
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`However, the Circuits also agree that “courts have discretion to stay or dismiss claims
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`subject to a valid arbitration agreement.” Houtchens, 2022 WL 17736778, at *8 (citations omitted);
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`Baptist Hosp. of Miami, Inc., 376 F. Supp. 3d at 1311 (“The Eleventh Circuit has also affirmed
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`dismissal on those grounds.”) (citing Caley v. Gulfstream Aerospace Corp., 333 F.Supp.2d 1367
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`(N.D. Ga. 2004), aff'd, 428 F.3d 1359 (11th Cir. 2005)). “A trial court may act on its own initiative
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`to note the inadequacy of a complaint and dismiss it for failure to state a claim….” Sparling v.
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`Hoffman Const. Co., 864 F.2d 635, 638 (9th Cir. 1988) (citations omitted) (affirming dismissal of
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`claims based on agreement to arbitrate); see also Alvarado v. Pac. Motor Trucking Co., No. 14-
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`cv-0504, 2014 WL 3888184, at *7 (C.D. Cal. Aug. 7, 2014), aff’d, 672 F. App’x 687 (9th Cir.
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`2016) (“When a court determines that the entirety of a dispute is subject to arbitration, the court
`
`la